Loomis’ Fuss: 10 Year Treasury Yield

Loomis Sayles vice chairman Dan Fuss says the 10-year Treasury yield
could go “north of 4 percent” within two years, but geopolitical risks and
economic deterioration could keep yields lower.

Fuss, known as Wall Street’s Warren Buffett of Bonds, said on Tuesday at
Loomis Sayles’ annual media luncheon “the pattern of (Treasury) yields”
drifting higher should stay intact if there are no major geopolitical and
domestic disruptions. “These are huge ‘ifs’,” said Fuss, who helps manage more
than $268 billion.

Loomis said the firm is finding value in energy-linked stocks and
corporate bonds, most of which include oil-producing emerging markets including
Brazil and Colombia. Loomis said the firm is also looking at battered Russian
and Mexican assets.

“We like Mexico, which has been punished because of the NAFTA (North
American Free Trade Agreement) talks,” Andrea Dicenso, vice president of
Loomis, said at the event. “We’re even looking at Russian assets which have
become cheaper,” she said.

Dicenso said Loomis likes emerging market countries that are
commodities-rich because they also offer higher positive real yields.” Dicenso
said 2018 contrasts with previous years as the “increase in volatility is here
to stay.”